Engineering conglomerate Larsen & Toubro (L&T) doubled its net profit year-on-year for the quarter ended June 30 to R 967 crore, helped by new orders and gains from the sale of stakes it held in companies like L&T Finance Holdings and City Union Bank.
The company posted a consolidated turnover of R18,975 crore for the June quarter, 10% higher than a year earlier.
L&T’s June quarter results surpassed Street expectations. A Bloomberg poll of L&T’s earnings estimates put out by analysts tracking the company had pegged its net profit to come in at R800 crore and revenues at R11,587 crore.
L&T’s financial performance in the April-June period was aided by an exceptional gain of R249 crore. This was on account of L&T selling an 8% stake in its financial subsidiary L&T Finance Holdings during the quarter to comply with rules laid down by the Securities and Exchange Board of India that mandates the maximum level of promoters’ holding in a listed company at 75%. The conglomerate also sold its entire holding of 4.55% in City Union Bank, held through L&T Finance Holdings, during this period. L&T’s June quarter earnings also take into account profit from the sale of its stake in Dhamra Port, which it sold — along with Tata Steel — to Adani Ports and Special Economic Zone in May.
A quarter of L&T’s total consolidated turnover came from jobs executed overseas. However, this contribution declined 16% y-o-y because much of the pick-up in international orders has started in the last few months and L&T is hopeful that should reflect in sales over the next few quarters.
The company’s total expenses surged 8.4% y-o-y to Rs 17,267 crore. This was primarily on account of a 12% increase in staff cost, which was due to additional hiring of 6,000 people at the group level. L&T’s performance could have looked even better but for a 45% surge in depreciation charges in the June quarter over the previous year, on account of changed guidelines to calculate depreciation in line with the new Companies Act.
L&T’s operating profit was up 34% over the same period a year ago at Rs 2,515 crore and operating margins improved 240 basis points to 13.3% during the quarter.
The company’s consolidated order inflows during the quarter rose 11% y-o-y to Rs 33,408 crore, while its total order book stood at